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13 March, 18:40

McLeod Inc. is considering an investment that has an expected return of 15% and a standard deviation of 10%. What is the investment's coefficient of variation?

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  1. 13 March, 19:49
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    Coefficient of variation = 0.67

    Explanation:

    Coefficient of variation:

    The coefficient of variation (CV) is the ratio of the standard deviation to the mean.

    Formula:

    Coefficient of variation = Standard deviation / expected return

    McLeod Inc. is considering an investment that has an expected return of 15% and a standard deviation of 10%.

    Therefore by putting the values in the above formula, we get

    Coefficient of variation = 10% / 15%

    Coefficient of variation = 0.10 / 0.15

    Coefficient of variation = 0.67
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